Deutsche Bank Remains Positive On Salesforce Shares Following Earnings

In a research report sent to investors today, Deutsche Bank analyst Karl Keirstead reiterated a Buy rating on Salesforce (NYSE:CRM) with a $70 price target, following the release of the company’s fiscal 2015 third-quarter results.

Keirstead noted, “We estimate that (SFDC) grew billings by 29% in constant currency in 3QF15 (organic given we’ve lapped ET acquisition), versus our estimate of organic billings growth of 25%-28% in each of the prior three quarters. Importantly, SFDC guided to reported 4QF15 DR growth of 27% (~29% in constant currency assuming a similar FX hit in 4QF15 as they saw in 3QF15), modestly lower than “normal” seasonality but in-line assuming SFDC beats this guidance. The FX-adjusted 4QF15 revenue and DR guidance implies constant currency billings growth of 28%, which doesn’t signal any deterioration in momentum.”

The analyst concluded, “Bottom line, this print was more in-line than a beat and wasn’t a thesis-changer. 4QF15 performance matters a lot more and overall tone from our checks remain positive. SFDC shares trade at an EV/CY2015 Revs multiple of 6.1x, which in our view is attractive given our higher confidence in the durability of a 25% growth profile. Downside risk factors include a slowdown in the Sales Cloud business, slower margin gains and fewer-than-expected large deal signings in 4QF15.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Karl Keirstead has a total average return of 6.7% and a 53.1% success rate. Keirstead has a 23.5% average return when recommending CRM, and is ranked #847 out of 3377 analysts.

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